Inergy considering $400 million of potential acquisition opportunities

By Jennifer Lanning Drey

Portland, Ore., Nov. 30 - Inergy LP has signed letters of intent for more than $400 million of potential investments in assets that meet the company's acquisition criteria, John Sherman, Inergy's chief executive officer, said Monday during its fiscal fourth-quarter and year-end conference call.

"We are seeing a pickup of activity in our acquisition pipeline," Sherman said.

"These are non-binding letters of intent with work to do, but we are excited about the opportunities," he added.

The CEO said he was unable to provide much detail on the potential acquisitions, but he later noted that they are expected to be immediately accretive and are representative of a nearly 50-50 mix of propane and midstream transactions.

The opportunities are "very consistent with the assets we currently own," he later added.

Although Inergy won't necessarily be successful at closing all of the potential opportunities, Sherman said the company expects to have something positive to share on the merger-and-acquisition front in the next few months.

Successful fiscal year

In fiscal 2009, Inergy achieved its key financial performance objectives, grew distributable cash flow by 27% and increased its distribution in every quarter, Sherman said.

The company also raised $400 million in long-term growth capital, kept its existing expansion projects moving forward and expanded its future growth outlook, he said.

For the fiscal year ended Sept. 30, Inergy posted adjusted EBITDA of $296.8 million, which represented an increase of $57.8 million, or approximately 24%, from $239.0 million in the prior fiscal year.

Distributable cash flow was $221.7 million for fiscal 2009, compared with $174.3 million in fiscal 2008.

"Inergy was designed and built to perform consistently in a variety of economic environments," Sherman said.

Inergy is a Kansas City, Mo.-based company engaged in the sale, distribution, storage, marketing, trade, processing and fractionation of propane, natural gas and other natural gas liquids.

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